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AfrElec P O L I C Y AfrElec
Eskom can cope with lockdown, for now
SOUTH AFRICA
ESKOM has told investors it does not need any more government cash to support current opera- tions, even as a coronavirus (COVID-19) caused national lockdown slashes demand for electricity and for billing revenue.
The company needs to raise ZAR89bn (4.9$bn) this year, and ZAR56bn ($3bn) of that will come from an existing state bailout, CEO André de Ruyter and chief financial officer Calib Cassim told investors. Bloomberg reported.
About 40% of the remaining funding required has been committed by development finance institutions (DFIs).
The rest will come in the form of structured products from banks, export-credit agencies and the sale of domestic bonds, the Eskom officials told investors.
The Eskom officials insisted the company could withstand a few more weeks of a lockdown if it was extended. An estimated revenue loss of ZAR4bn ($218mn) rand is anticipated for the three-week lockdown period, which began on March 26.
The company now has 9.5 GW offline for
maintenance, rather than the more usual 4 GW, as demand falls with the closure of mines and factories.
However, the company said last week that longer-term closures of plants for greater main- tenance would have to wait, as the company was not able to source vital parts from abroad.
The company said on April 8 that it would not be able to fix local power cuts caused by illegal connections and vandalism.
It said that doing so would not be financially viable and would only put further strain on criti- cal resources during the national lockdown.
Meanwhile, Eskom is to extend its deadline for request for proposals (RfPs) to participate in its Short-Term Power Purchase Programme (STPPP) from April 30 to May 11 because of the lockdown period.
Eskom wants to use the STPPP to source short-term supplies at affordable prices to reduce its supply gap. Generating sources include indus- trial giants such as Sasol, with its own cogenera- tion capacity, as well as power stations abroad and renewables projects.™
FUELS
Angola delays picking refinery contractor
ANGOLA
ANGOLA’S government has delayed issuing a tender award for the construction of an oil refin- ery at the port of Soyo because of the coronavirus (COVID-19) pandemic.
In a statement, its ministry and mineral resources said that the date announcing the winner of the tender had been postponed from March 31. Angola declared a state of emergency on March 27 in response to the virus.
The ministry said it had shortlisted nine pro- posals from international contractors to erect the 100,000 barrel per day (bpd) refinery in Febru- ary. They were submitted by SDRC, Jiangsu Sin- ochem Construction, Quantem Consortium, CMEC, AIDA and VSF, Tobaka Investment Group, Atis Nebest Angola, Satarem, Gemcorp Capital and CPP.
The contractors offered to build the facility in periods ranging from 16 to 40 months. Refining operations are slated to start in 2023.
Africa’s second-biggest oil producer after Nigeria has sought for years to boost its refining capacity in order to ease fuel and power short- ages. The country currently has only one refinery – a 65,000 bpd plant in its capital Luanda that can cover around 20% of national fuel demand.
It aims to build three new refineries in
Cabinda, Lobito and Soyo, but these projects have faced significant delays because of prob- lems finding investors.
National oil company (NOC) Sonangol awarded a contract to Hong Kong-based consor- tium United Shine last year to build the 60,000 bpd Cabinda refinery. But it terminated the deal in December, according to local press, citing the group’s failure to prove it had the financial capa- bility to see the project through.
Sonangol went on to sign a preliminary agreement on financing and implementation of the project with London-based investment firm Gemcorp Capital last month, and has said it is looking for other investors as well.
Cabinda is due to start up by the end of 2021, initially processing only 30,000 bpd of crude, before reaching its full capacity two years later.
Lobito is the largest of the three planned refin- eries, with a throughput capacity of 200,000 bpd. The project, with a $10bn budget, was initiated in 2012 but shelved four years later because of the oil price crash. Sonangol renewed its search for investment partners in late 2017.
All three refineries are expected to be con- structed on a build-operate-transfer (BOT) basis. ™
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